One counterintuitive tip: Don’t oversell how different your startup is.
Too many startup founders’ otherwise great ideas fall flat when they pitch them all wrong. As a venture capitalist, I’ve seen pitches flounder for lots of reasons. Sometimes it’s forgetting to state which problem the idea is meant to solve, or even the simple value proposition. Other times it’s failing to identify exactly who the end buyer might be.
I get it—pitching well is difficult and amazingly stressful. And sometimes a bad pitch can spell the end for what might have turned out to be a successful business. To avoid that, these are a few things to consider when you’re crafting a pitch to take to investors.
1. Wipe “Better” From Your Lexicon
“Better” doesn’t mean very much. Talk to me in terms of making things cheaper, faster, or less risky. Those things are more tangible and usually measurable. VCs need the facts, not opinions. If you’re pitching something that’s been done before, there has to be some kind of crucial change that distinguishes it—substantively and, yes, for the better—from whatever there was in the past. “Me too” products don’t usually fare that well.
For example, years ago we saw very good returns on an investment with an online insurance-comparison engine. People were already buying insurance online, but it was still hard to get quotes from different companies without spending hours of time on the process. Folks were surfing the web for all sorts of information, so getting a reliable comparison was a small extra step that reduced risk, saved money, and saved time. That made for a great mix—and instead of positioning it as a “better” version of what was already out there, the startup made it clear their approach was actually different enough to make an impact . . .
2. Don’t Be Too Different
. . . but without overdoing it. After all, being too different adds risk to a VC’s investment.
So don’t bend over backward to tell me how wildly original and game-changing your business will be; you can actually kill a solid idea by overselling its novelty. Instead, talk to me about balancing newness with the realities of the market today. Pitch us on how you can use existing sales channels to sell your new product or service. This shows us that your new service can be used by the current players who are out there already. Even if you’re onto something brilliant, I can’t fund distribution, marketing, a brand new factory, and a supply-chain system all in one go.
When we first invested in e-sports, I initially thought it was a good idea, but too complicated. I then understood that millions were already playing video games, they loved to watch the experts play, and wanted to cheer on the leaders during tournaments. The idea of building out a professional team wasn’t farfetched at all. Most of the pieces were there already, and we could just finish the puzzle. It’s up to founders to show us that all the dots are actually there; this way we can connect them.
3. Tell Me Exactly How You’ll Invest My Money
Great ideas die when the spending details are too murky. You might be surprised how many pitches don’t have this thought out in advance. I want to see a simple slide that shows me exactly what you will do with the money and why. And please, don’t tell us that our investment will be used to pay you and your fellow cofounders because you’ve all been working on this project in your garage for two years without drawing a salary. VCs aren’t here to get you out of a tough situation.
I want to know how the money will be used to grow the company, not to take care of whatever debts you’ve incurred. I want to get a sense of how quickly you plan to spend the investment, which milestones you’re planning to hit, and why you’ve picked the specific priorities you’re showing me. Give me some confidence that I’m not putting money into a black hole. “Trust me” isn’t a phrase any pitch should contain.
4. Explain How You’ll Build Your Team
Ideas are great, but companies succeed or die based on execution. Like most VCs, I’ll invest in a B idea with an A team, rather than an A idea with a B team. Almost no business plan is static; unexpected things happen, and you need to be as ready as you possibly can to handle them.
The key ingredient for doing that is a solid team. Talk to me about the people who are already on board and what makes them great at what they do. Advise how many people will work together as a team, not just as individuals. I can’t tell you how many times we have run into issues with a lot of A players that, when put together, make a dysfunctional C team!
One of the best ideas I’ve ever heard was from an entrepreneur who was planning to hire a bunch of people as she expanded her retail outlets. She described in depth how she’d recruit by checking out the waitstaff at restaurants, or looking for energetic sales staff even at mall kiosks. If she spotted someone who had good customer skills and high energy, she offered them a job. Like Southwest Airlines proved two decades ago, it’s smart to hire on attitude. This demonstrates to investors how you’ll attract talent as you grow.
5. Be Ready To Pivot If Your Pitch Time Gets Cut In Half
Yes, we promised you an hour, but something came up. It’s unfortunate but happens all the time. So plan ahead to adjust your pitch to half or even a quarter of the time you expected. Not only do you not have to reschedule this way, but VCs often like to see entrepreneurs who can improvise and show that they’re well-prepared for contingencies. The only absolute certainty in any business is that some things will go wrong. We like to see that you can change course on the fly and still get the job done.
Connecting these elements is tough, no doubt about it. And that’s partly by design. Investors aren’t trying to make it easy for you to get our money. We review literally hundreds of ideas a year and may only invest in five or six annually. Showing us that your idea is better than every other one we’ve heard all starts with pitching it in the best light. Nail these five things, and your odds will be better than most.
